The US dollar lost more than 12,000 rials on Sunday and declined to 284,000 rials or 4.5% in one day. It had reached an all-time high of 300,000 rials on Thursday.
The euro was down by 6,600 rials to be worth 338,873 rials dropping close to 2% compared to Saturday. The UK pound sterling slipped more than 2% to trade and was quoted at 373,000 rials.
Moneychangers working for the CBI reported the sharpest decline. Melli Exchange, of state-owned Bank Melli Iran, quoted the dollar at 269,000 rials, down 5.5% or 14,000 rials compared to the session earlier.
The Persian-language economic news website, eghtesadnews, said decline in the UAE dirham could be a potential factor behind the retreat of major currencies.
Emirati currency retreated below the critical 80,000-rial in the early hours of Sunday sending a signal to other foreign currencies.
News outlets said the AED was worth 78,200 rials on Sunday, down more than 3.5% compared to the earlier session. The dirham is important largely because the Persian Gulf Arab sheikhdom is a trade hub for Iranian businesses.
Market analysts mention a combination of internal and external factors driving the declining trend. Some say the dollar rates had reached a strong resistance level closing near 300,000 rials but reversed course when failing to break past that level.
There are experts who attribute the declining forex rates more to political factors than the market dynamics.
Forex investors in Tehran usually eye political developments and more importantly those that relate to the upcoming United States presidential elections. As such, the Donald Trump’s coronavirus disease has also affected Iran’s forex market.
Traders say the next US president’s Iran policy would be a key topic in the currency and other financial markets in and outside the country.
Reacting to the steep volatility in the currency market, CBI boss Abdolnasser Hemmati said Saturday the “current state of affairs cannot continue for long”.
The senior banker referred to the ongoing efforts to bring back assets and reserves frozen overseas. Due to the tough economic sanctions imposed by Trump’s America, Iran cannot access billions of dollars from oil and non-oil exports.
Gold Follows Suit
As the bullion gold market is heavily influenced by forex rates, the precious metal pared some earlier gains on Sunday moving downward.
The Emami gold coin fell by 11 million rials in one day to be worth 137 million rials on Sunday or down 8.3%. it had reached a record high of 152 million rials last week.
Bahar Azadi coin lost more than 6% to reach 130 million rials and one gram of 18-karat gold was traded at 13 million rials, down 3% compared with Saturday’s close.
In talk with Tasanim News Agency, Mohammad Kashti-Aray, president of Iran's Special Commission of Gold and Jewelry, said the gold market saw a rise in sellers and cautiousness from buyers.
“Buyers are awaiting for prices to reach minimum levels,” he was quoted as saying.
Despite decline in prices the gold coin is still traded 10 million rials above its real value, he said.